The U.S. Federal Reserve hiked the Fed Funds rate by 25 basis points on Wednesday, the first rate hike since 2018.
While this move was largely anticipated, the markets still rallied on the news; both the stock markets and safe haven assets like gold rose. The dollar fell slightly.
Steve Hanke, professor of Applied Economics at Johns Hopkins University told David Lin, anchor for Kitco News, that the stock markets interpreted this news as quite dovish.
Additionally, gold rallied because the gold market understands that this 25 basis point hike won’t be enough to combat inflation, which is likely to remain in the 6% to 9% range until 2024.
For live gold sentiment turning point alerts, visit the Hanke-Cofnas Gold Sentiment Index at https://thegoldsentimentreport.com/html/goldpack.html.
Follow David Lin on Twitter: @davidlin_TV (https://twitter.com/davidlin_TV)
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0:00 – Fed hikes rates
1:30 – Gold’s move
4:15 – Root causes of inflation
6:11 – Inflation vs. deflation
8:14 – Real wage forecast
11:10 – Reported vs. actual inflation
17:29 – What can reverse inflation?
20:01 – Fed reducing balance sheet
21:53 – Hanke-Cofnas Gold Sentiment Index
#inflation #FedHike #economics
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